Government asks for state-level IIP data on revised base of 2011-12

NEW DELHI: It will soon become easier to compare the health of industrial sectors in the states and verify the country’s total factory output. The Centre has asked the states to come out with their own Index of Industrial Production (IIP) on a monthly basis by the end of 2017-18.

The government has asked for the state-level IIP to be constructed on the revised base of 2011-12 when it has yet to prepare the national IIP series on the new base.

The statistics ministry has been using the 2004-05 base even though work on the new series has been on for almost two years. “We have given a message to states to come out with state-level IIP with the new base on a monthly basis. If not monthly, then they have to give quarterly numbers,” said an official aware of the development.

The Central Statistics Office has created an individual list of items for each state, depending on their volume and value of production.

“The advantage of getting statelevel data is that detailed sectorwise information will be available. Items with relatively lesser weight at the national level will get adequately captured in state IIPs. It is also possible that the number of firms which get included in the IIP data may increase, thereby giving a better picture of industrial production,” said Devendra Kumar Pant, chief economist at India Ratings, a Fitch Group company.

At present, some states compile monthly data, while others prepare quarterly numbers. In some cases, the index is not shared with the Centre. Some states face resource constraints in compiling the statistics.

“Ideally, the summation of state IIPs should lead to the national IIP but because the composition of items at state level would be different, we’ll get an approximate number. This will help verify the Central-level data that can’t be done at present,” said Madan Sabnavis, chief economist at Care Ratings.

The IIP has been called a flawed indicator by economists since it gets swayed by a single item and does not capture changes in usage of items due to the old base.

Contrary to expectations, the IIP rose 5.7% in November, the first month of the government’s demonetisation drive, after declining 1.81% in October. The cumulative growth of India’s factory output for the April-November period was at 0.4% compared with 3.8% during the corresponding period of the previous financial year.

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